Schlumberger Announces Full-Year and Fourth-Quarter 2014 Results
- Fourth-quarter revenue of
$12.6 billion increased 6% year-on-year - Fourth-quarter EPS of
$1.50 , excluding charges and credits, grew 11% year-on-year - Board approves 25% increase in dividend, effective
April 10, 2015 - 12.1 million shares repurchased during the quarter for
$1.1 billion - Fourth-quarter restructuring, impairment and currency devaluation charges of
$1.27 per share
Full-Year Results
(Stated in millions, except per share amounts) | ||||||||||||||
Twelve Months Ended | Growth | |||||||||||||
Dec. 31, 2014 | Dec. 31, 2013 | Year-on-year | ||||||||||||
Revenue | $ | 48,580 | $ | 45,266 | 7 | % | ||||||||
Pretax operating income | 10,576 | 9,344 | 13 | % | ||||||||||
Income from continuing operations, excluding charges and credits* | 7,282 | 6,332 | 15 | % | ||||||||||
Diluted EPS from continuing operations, excluding charges and credits* | $ | 5.57 | $ | 4.75 | 17 | % | ||||||||
Pretax operating margin | 21.8 | % | 20.6 | % | 113 bps | |||||||||
North America revenue | $ | 16,151 | $ | 13,897 | 16 | % | ||||||||
North America pretax operating income | 3,057 | 2,735 | 12 | % | ||||||||||
North America pretax operating margin | 18.9 | % | 19.7 | % | -75 bps | |||||||||
International revenue | $ | 32,089 | $ | 30,932 | 4 | % | ||||||||
International pretax operating income | 7,677 | 6,879 | 12 | % | ||||||||||
International pretax operating margin | 23.9 | % | 22.2 | % | 168 bps | |||||||||
*Income from continuing operations, including charges and credits, was $5.643 billion in 2014 and $6.801 billion in 2013. Diluted EPS from continuing operations, including charges and credits, was $4.31 in 2014 and $5.10 in 2013. See section entitled "Charges & Credits" for details. | ||||||||||||||
Schlumberger CEO
“The strength of these results demonstrated the resiliency of our business portfolio in the face of activity challenges in 2014 in
Fourth-Quarter Results
(Stated in millions, except per share amounts) | ||||||||||||||||||||||
Three Months Ended | Growth | |||||||||||||||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sequential | Year-on-year | ||||||||||||||||||
Revenue | $ | 12,641 | $ | 12,646 | $ | 11,906 | - | 6 | % | |||||||||||||
Pretax operating income | 2,781 | 2,806 | 2,604 | -1 | % | 7 | % | |||||||||||||||
Income from continuing operations, excluding charges and credits* | 1,941 | 1,949 | 1,786 | - | 9 | % | ||||||||||||||||
Diluted EPS from continuing operations, excluding charges and credits* | $ | 1.50 | $ | 1.49 | $ | 1.35 | 1 | % | 11 | % | ||||||||||||
Pretax operating margin | 22.0 | % | 22.2 | % | 21.9 | % | -19 bps | 13 bps | ||||||||||||||
North America revenue | $ | 4,324 | $ | 4,255 | $ | 3,649 | 2 | % | 19 | % | ||||||||||||
North America pretax operating income | 849 | 825 | 716 | 3 | % | 19 | % | |||||||||||||||
North America pretax operating margin | 19.6 | % | 19.4 | % | 19.6 | % | 24 bps | 1 bps | ||||||||||||||
International revenue | $ | 8,210 | $ | 8,309 | $ | 8,151 | -1 | % | 1 | % | ||||||||||||
International pretax operating income | 1,990 | 2,041 | 1,917 | -2 | % | 4 | % | |||||||||||||||
International pretax operating margin | 24.2 | % | 24.6 | % | 23.5 | % | -33 bps | 71 bps | ||||||||||||||
*Income from continuing operations, including charges and credits, was $302 million in the fourth-quarter of 2014, $1.949 billion in the third-quarter of 2014 and $1.664 billion in the fourth-quarter of 2013. Diluted EPS from continuing operations, including charges and credits, was $0.23 in the fourth-quarter of 2014, $1.49 in the third-quarter of 2014 and $1.26 in the fourth-quarter of 2013. See section entitled "Charges & Credits" for details. | ||||||||||||||||||||||
“Fourth-quarter results were led by record revenue in
“Among the Technologies, the
“During the quarter, the forecasts for global GDP softened somewhat while growth is still expected to be 3% in 2015, confirming that the global economic recovery is intact. As a result, demand for oil continues to increase but significantly higher marketed supply has led to a dramatic fall in oil price. As E&P investment falls in response, decline rates will impact oil production capacity, while sharply lower E&P activity will delay supply additions. At the same time, markets for natural gas remain comfortably supplied in
“In this uncertain environment, we continue to focus on what we can control. We have already taken a number of actions to restructure and resize our organization that has led us to record a number of charges in the fourth quarter. We are convinced that performance must now be driven by an accelerated change in the way we work through our transformation program. The delivery of new technology that improves the performance of our customers’ reservoirs; the increases in efficiency and reliability that reduce overall finding, development and production costs; and the opportunities for growth from more integration—are all significant drivers of our own and our customers’ performance. Tangible results have already been recorded and, as we accelerate the benefits of the transformation program across both Technologies and GeoMarkets in 2015, we believe we are well-placed to outperform.
“Our considerable financial strength, as demonstrated by a strong cash conversion rate of earnings that generated over
Other Events
On
During the quarter, Schlumberger repurchased 12.1 million shares of its common stock at an average price of
On
North America fourth-quarter revenue of
During the fourth quarter, new technologies helped to meet customer challenges in North American unconventional resource development. These technologies targeted to increased production and more efficient operations enabling customers to lower overall cost in a declining commodity-price market.
In
In Oklahoma, Well Services BroadBand Sequence fracturing service was used for
In US land,
International Areas
Revenue for the International Areas of
Revenue in the
Sequentially, International Area pretax operating margin of 24.2% decreased 33 bps.
During the quarter, the International Areas saw a number of integration-related highlights.
In
Offshore
In
(Stated in millions, except margin percentages) | |||||||||||||||||||||
Three Months Ended | Growth | ||||||||||||||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sequential | Year-on-year | |||||||||||||||||
Revenue | $ | 3,093 | $ | 3,184 | $ | 3,306 | -3 | % | -6 | % | |||||||||||
Pretax operating income | 956 | 954 | 1,031 | - | -7 | % | |||||||||||||||
Pretax operating margin | 30.9 | % | 30.0 | % | 31.2 | % | 95 bps | -27 bps | |||||||||||||
Sequentially,
Pretax operating margin of 30.9% was 95 bps higher sequentially on a favorable revenue mix from high-margin multiclient license and software sales.
In addition to contract awards during the fourth quarter, new
In
In
In
In the US Gulf of
Drilling Group
(Stated in millions, except margin percentages) | |||||||||||||||||||||
Three Months Ended | Growth | ||||||||||||||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sequential | Year-on-year | |||||||||||||||||
Revenue | $ | 4,658 | $ | 4,821 | $ | 4,440 | -3 | % | 5 | % | |||||||||||
Pretax operating income | 966 | 1,045 | 880 | -8 | % | 10 | % | ||||||||||||||
Pretax operating margin | 20.7 | % | 21.7 | % | 19.8 | % | -94 bps | 91 bps | |||||||||||||
Sequentially,
Pretax operating margin declined 94 bps sequentially to 20.7% mainly due to currency and activity declines in
During the fourth quarter, new
In
Further to optimizing well placement offshore
In
In the Norwegian sector of the
In
In
In
(Stated in millions, except margin percentages) | |||||||||||||||||||||
Three Months Ended | Growth | ||||||||||||||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sequential | Year-on-year | |||||||||||||||||
Revenue | $ | 4,954 | $ | 4,697 | $ | 4,219 | 5 | % | 17 | % | |||||||||||
Pretax operating income | 908 | 857 | 730 | 6 | % | 24 | % | ||||||||||||||
Pretax operating margin | 18.3 | % | 18.3 | % | 17.3 | % | -3 bps | 101 bps | |||||||||||||
Pretax operating margin of 18.3% was flat sequentially as pricing pressure, particularly in the US land market, was offset by an improved volume of activity in
In
Offshore Congo, Well Services UltraMARINE* high temperature seawater-based fracturing fluid was used for
In
In
In
Also in
Financial Tables |
||||||||||||||||
Condensed Consolidated Statement of Income |
||||||||||||||||
(Stated in millions, except per share amounts) | ||||||||||||||||
Fourth Quarter | Twelve Months | |||||||||||||||
Periods Ended December 31, | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue | $ | 12,641 | $ | 11,906 | $ | 48,580 | $ | 45,266 | ||||||||
Interest and other income | 71 | 59 | 291 | 165 | ||||||||||||
Gain on formation of OneSubsea (1) | - | - | - | 1,028 | ||||||||||||
Expenses | ||||||||||||||||
Cost of revenue (1) | 9,691 | 9,283 | 37,398 | 35,331 | ||||||||||||
Research & engineering | 324 | 304 | 1,217 | 1,174 | ||||||||||||
General & administrative | 122 | 111 | 475 | 416 | ||||||||||||
Impairments & other (1) | 1,773 | - | 1,773 | 456 | ||||||||||||
Interest | 87 | 97 | 369 | 391 | ||||||||||||
Income before taxes | 715 | 2,170 | 7,639 | 8,691 | ||||||||||||
Taxes on income (1) | 398 | 487 | 1,928 | 1,848 | ||||||||||||
Income from continuing operations | 317 | 1,683 | 5,711 | 6,843 | ||||||||||||
Loss from discontinued operations | - | - | (205 | ) | (69 | ) | ||||||||||
Net income | 317 | 1,683 | 5,506 | 6,774 | ||||||||||||
Net income attributable to noncontrolling interests | 15 | 19 | 68 | 42 | ||||||||||||
Net income attributable to Schlumberger | $ | 302 | $ | 1,664 | $ | 5,438 | $ | 6,732 | ||||||||
Schlumberger amounts attributable to: | ||||||||||||||||
Income from continuing operations (1) | $ | 302 | $ | 1,664 | $ | 5,643 | $ | 6,801 | ||||||||
Loss from discontinued operations | - | - | (205 | ) | (69 | ) | ||||||||||
Net income | $ | 302 | $ | 1,664 | $ | 5,438 | $ | 6,732 | ||||||||
Diluted earnings per share of Schlumberger (2) | ||||||||||||||||
Income from continuing operations (1) | $ | 0.23 | $ | 1.26 | $ | 4.31 | $ | 5.10 | ||||||||
Loss from discontinued operations | - | - | (0.16 | ) | (0.05 | ) | ||||||||||
Net income | $ | 0.23 | $ | 1.26 | $ | 4.16 | $ | 5.05 | ||||||||
Average shares outstanding | 1,282 | 1,312 | 1,295 | 1,323 | ||||||||||||
Average shares outstanding assuming dilution | 1,293 | 1,326 | 1,308 | 1,333 | ||||||||||||
Depreciation & amortization included in expenses (3) | $ | 1,065 | $ | 988 | $ | 4,094 | $ | 3,879 |
(1) See section entitled “Charges & Credits” for details.
(2) May not add due to rounding.
(3) Includes depreciation of property, plant and equipment, as well as amortization of intangible assets, multiclient seismic data costs and SPM investments.
Condensed Consolidated Balance Sheet | ||||||||
(Stated in millions) | ||||||||
Dec. 31, | Dec. 31, | |||||||
Assets | 2014 | 2013 | ||||||
Current Assets | ||||||||
Cash and short-term investments | $ | 7,501 | $ | 8,370 | ||||
Receivables | 11,171 | 11,497 | ||||||
Other current assets | 6,022 | 6,358 | ||||||
24,694 | 26,225 | |||||||
Fixed income investments, held to maturity | 442 | 363 | ||||||
Fixed assets | 15,396 | 15,096 | ||||||
Multiclient seismic data | 793 | 667 | ||||||
Goodwill | 15,487 | 14,706 | ||||||
Other intangible assets | 4,654 | 4,709 | ||||||
Other assets | 5,438 | 5,334 | ||||||
$ | 66,904 | $ | 67,100 | |||||
Liabilities and Equity | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 9,246 | $ | 8,837 | ||||
Estimated liability for taxes on income | 1,647 | 1,490 | ||||||
Short-term borrowings and current portion | ||||||||
of long-term debt | 2,765 | 2,783 | ||||||
Dividend payable | 518 | 415 | ||||||
14,176 | 13,525 | |||||||
Long-term debt | 10,565 | 10,393 | ||||||
Postretirement benefits | 1,501 | 670 | ||||||
Deferred taxes | 1,296 | 1,708 | ||||||
Other liabilities | 1,317 | 1,169 | ||||||
28,855 | 27,465 | |||||||
Equity | 38,049 | 39,635 | ||||||
$ | 66,904 | $ | 67,100 | |||||
Net Debt
“Net Debt” represents gross debt less cash, short-term investments and fixed income investments, held to maturity. Management believes that Net Debt provides useful information regarding the level of Schlumberger’s indebtedness by reflecting cash and investments that could be used to repay debt.
Details of changes in Net Debt follow:
(Stated in millions) | ||||||||||||||||
Periods Ended December 31, | Twelve
Months 2014 |
Fourth Quarter
2014 |
Twelve
Months 2013 |
|||||||||||||
Income from continuing operations before noncontrolling interests | $ | 5,711 | $ | 317 | $ | 6,843 | ||||||||||
Impairments and other charges, net of tax | 1,167 | 1,167 | 467 | |||||||||||||
Currency devaluation loss in Venezuela | 472 | 472 | 92 | |||||||||||||
Gain on formation of OneSubsea | - | - | (1,028 | ) | ||||||||||||
Income from continuing operations before noncontrolling
interests, excluding charges & credits |
7,350 | 1,956 | 6,374 | |||||||||||||
Depreciation and amortization (1) | 4,094 | 1,065 | 3,879 | |||||||||||||
Pension and other postretirement benefits expense | 355 | 89 | 518 | |||||||||||||
Stock-based compensation expense | 329 | 83 | 315 | |||||||||||||
Pension and other postretirement benefits funding | (390 | ) | (72 | ) | (538 | ) | ||||||||||
(Increase)decrease in working capital | (36 | ) | 955 | 120 | ||||||||||||
Other | (507 | ) | (163 | ) | 22 | |||||||||||
Cash flow from operations | 11,195 | 3,913 | 10,690 | |||||||||||||
Capital expenditures | (3,976 | ) | (1,210 | ) | (3,943 | ) | ||||||||||
SPM investments | (740 | ) | (171 | ) | (902 | ) | ||||||||||
Multiclient seismic data capitalized | (321 | ) | (109 | ) | (394 | ) | ||||||||||
Free cash flow (2) | 6,158 | 2,423 | 5,451 | |||||||||||||
Stock repurchase program | (4,678 | ) | (1,096 | ) | (2,596 | ) | ||||||||||
Dividends paid | (1,968 | ) | (517 | ) | (1,608 | ) | ||||||||||
Proceeds from employee stock plans | 825 | 30 | 537 | |||||||||||||
337 | 840 | 1,784 | ||||||||||||||
Business acquisitions and investments, net of cash acquired plus debt assumed | (1,501 | ) | (452 | ) | (610 | ) | ||||||||||
Payment for OneSubsea | - | - | (600 | ) | ||||||||||||
Other | 220 | 70 | 94 | |||||||||||||
(Increase)decrease in Net Debt | (944 | ) | 458 | 668 | ||||||||||||
Net Debt, Beginning of period | (4,443 | ) | (5,845 | ) | (5,111 | ) | ||||||||||
Net Debt, December 31st | $ | (5,387 | ) | $ | (5,387 | ) | $ | (4,443 | ) | |||||||
Components of Net Debt | Dec. 31, 2014 | Sept 30, 2014 | Dec. 31, 2013 | |||||||||||||
Cash and short-term investments | $ | 7,501 | $ | 6,759 | $ | 8,370 | ||||||||||
Fixed income investments, held to maturity | 442 | 473 | 363 | |||||||||||||
Short-term borrowings and current portion of long-term debt | (2,765 | ) | (1,451 | ) | (2,783 | ) | ||||||||||
Long-term debt | (10,565 | ) | (11,626 | ) | (10,393 | ) | ||||||||||
$ | (5,387 | ) | $ | (5,845 | ) | $ | (4,443 | ) | ||||||||
(1) |
|
Includes depreciation of property, plant and equipment and amortization of intangible assets, multiclient seismic data costs and SPM investments. | ||||||||||||||
(2) |
|
"Free Cash Flow" represents cash flow from operations less capital expenditures, SPM investments and multiclient seismic data capitalized. Management believes that this is an important measure because it represents funds available to reduce debt and pursue opportunities that enhance shareholder value such as making acquisitions and returning cash to shareholders through stock repurchases and dividends. | ||||||||||||||
Charges & Credits
In addition to financial results determined in accordance with US generally accepted accounting principles (GAAP), this Full-Year and Fourth-Quarter 2014 Press Release also includes non-GAAP financial measures (as defined under the SEC’s Regulation G). The following is a reconciliation of these non-GAAP measures to the comparable GAAP measures:
(Stated in millions, except per share amounts) | |||||||||||||||||||
Fourth Quarter 2014 | |||||||||||||||||||
Pretax | Tax | Noncont. Interest | Net | Diluted
EPS (1) |
Income Statement
Classification |
||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $ | 2,488 | $ | 532 | $ | 15 | $ | 1,941 | $ | 1.50 | |||||||||
WesternGeco restructuring (2) | (806 | ) | (25 | ) | - | (781 | ) | (0.60 | ) | Impairment & other | |||||||||
Currency devaluation loss in Venezuela (2) | (472 | ) | - | - | (472 | ) | (0.36 | ) | Impairment & other | ||||||||||
Workforce reduction (2) | (296 | ) | (37 | ) | - | (259 | ) | (0.20 | ) | Impairment & other | |||||||||
Impairment of SPM project (2) | (199 | ) | (72 | ) | - | (127 | ) | (0.10 | ) | Impairment & other | |||||||||
Schlumberger income from continuing operations, as reported | $ | 715 | $ | 398 | $ | 15 | $ | 302 | $ | 0.23 | |||||||||
Twelve Months 2014 | |||||||||||||||||||
Pretax | Tax | Noncont. Interest | Net | Diluted
EPS |
Income Statement
Classification |
||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $ | 9,412 | $ | 2,062 | $ | 68 | $ | 7,282 | $ | 5.57 | |||||||||
WesternGeco restructuring (2) | (806 | ) | (25 | ) | - | (781 | ) | (0.60 | ) | Impairment & other | |||||||||
Currency devaluation loss in Venezuela (2) | (472 | ) | - | - | (472 | ) | (0.36 | ) | Impairment & other | ||||||||||
Workforce reduction (2) | (296 | ) | (37 | ) | - | (259 | ) | (0.20 | ) | Impairment & other | |||||||||
Impairment of SPM project (2) | (199 | ) | (72 | ) | - | (127 | ) | (0.10 | ) | Impairment & other | |||||||||
Schlumberger income from continuing operations, as reported | $ | 7,639 | $ | 1,928 | $ | 68 | $ | 5,643 | $ | 4.31 | |||||||||
Fourth Quarter 2013 | |||||||||||||||||||
Pretax | Tax | Noncont. Interest | Net | Diluted
EPS |
Income Statement
Classification |
||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $ | 2,322 | $ | 517 | $ | 19 | $ | 1,786 | $ | 1.35 | |||||||||
Provision for accounts receivable | (152 | ) | (30 | ) | - | (122 | ) | (0.09 | ) | Cost of revenue | |||||||||
Schlumberger income from continuing operations, as reported | $ | 2,170 | $ | 487 | $ | 19 | $ | 1,664 | $ | 1.26 | |||||||||
Twelve Months 2013 | |||||||||||||||||||
Pretax | Tax | Noncont. Interest | Net | Diluted
EPS |
Income Statement
Classification |
||||||||||||||
Schlumberger income from continuing operations, excluding charges & credits | $ | 8,271 | $ | 1,897 | $ | 42 | $ | 6,332 | $ | 4.75 | |||||||||
Gain on formation of OneSubsea joint venture | 1,028 | - | - | 1,028 | 0.77 | Gain on formation of OneSubsea | |||||||||||||
Impairment of equity method investments | (364 | ) | (19 | ) | - | (345 | ) | (0.26 | ) | Impairment & other | |||||||||
Provision for accounts receivable | (152 | ) | (30 | ) | - | (122 | ) | (0.09 | ) | Cost of revenue | |||||||||
Currency devaluation loss in Venezuela | (92 | ) | - | - | (92 | ) | (0.07 | ) | Impairment & other | ||||||||||
Schlumberger income from continuing operations, as reported | $ | 8,691 | $ | 1,848 | $ | 42 | $ | 6,801 | $ | 5.10 | |||||||||
(1) Does not add due to rounding. | |||||||||||||||||||
(2) Refer to section entitled "Supplemental Information" for further details of these charges. | |||||||||||||||||||
Product Groups | |||||||||||||||||||||||
(Stated in millions) | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
Dec. 31, 2014 | Sept. 30, 2014 |
Dec. 31, 2013 |
|||||||||||||||||||||
Revenue | Income Before Taxes | Revenue | Income Before Taxes | Revenue | Income Before Taxes | ||||||||||||||||||
Reservoir Characterization | $ | 3,093 | $ | 956 | $ | 3,184 | $ | 954 | $ | 3,306 | $ | 1,031 | |||||||||||
Drilling | 4,658 | 966 | 4,821 | 1,045 | 4,440 | 880 | |||||||||||||||||
Production | 4,954 | 908 | 4,697 | 857 | 4,219 | 730 | |||||||||||||||||
Eliminations & other | (64 | ) | (49 | ) | (56 | ) | (50 | ) | (59 | ) | (37 | ) | |||||||||||
Pretax operating income | 2,781 | 2,806 | 2,604 | ||||||||||||||||||||
Corporate & other | - | (221 | ) | - | (210 | ) | - | (197 | ) | ||||||||||||||
Interest income(1) | - | 8 | - | 8 | - | 7 | |||||||||||||||||
Interest expense(1) | - | (80 | ) | - | (84 | ) | - | (92 | ) | ||||||||||||||
Charges & credits | - | (1,773 | ) | - | - | - | (152 | ) | |||||||||||||||
$ | 12,641 | $ | 715 | $ | 12,646 | $ | 2,520 | $ | 11,906 | $ | 2,170 | ||||||||||||
Geographic Areas | |||||||||||||||||||||||
(Stated in millions) | |||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
Dec. 31, 2014 | Sept. 30, 2014 | Dec. 31, 2013 | |||||||||||||||||||||
Revenue | Income Before Taxes | Revenue | Income Before Taxes | Revenue | Income Before Taxes | ||||||||||||||||||
North America | $ | 4,324 | $ | 849 | $ | 4,255 | $ | 825 | $ | 3,649 | $ | 716 | |||||||||||
Latin America | 2,053 | 429 | 2,036 | 446 | 2,003 | 425 | |||||||||||||||||
Europe/CIS/Africa | 3,063 | 683 | 3,303 | 774 | 3,225 | 726 | |||||||||||||||||
Middle East & Asia | 3,094 | 877 | 2,970 | 820 | 2,923 | 766 | |||||||||||||||||
Eliminations & other | 107 | (57 | ) | 82 | (59 | ) | 106 | (29 | ) | ||||||||||||||
Pretax operating income | 2,781 | 2,806 | 2,604 | ||||||||||||||||||||
Corporate & other | - | (221 | ) | - | (210 | ) | - | (197 | ) | ||||||||||||||
Interest income(1) | - | 8 | - | 8 | - | 7 | |||||||||||||||||
Interest expense(1) | - | (80 | ) | - | (84 | ) | - | (92 | ) | ||||||||||||||
Charges & credits | - | (1,773 | ) | - | - | - | (152 | ) | |||||||||||||||
$ | 12,641 | $ | 715 | $ | 12,646 | $ | 2,520 | $ | 11,906 | $ | 2,170 | ||||||||||||
(1) Excludes interest included in the Product Groups and Geographic Areas results.
Product Groups | |||||||||||||||
(Stated in millions) | |||||||||||||||
Twelve Months Ended | |||||||||||||||
Dec. 31, 2014 | Dec. 31, 2013 | ||||||||||||||
Revenue | Income Before Taxes | Revenue | Income Before Taxes | ||||||||||||
Reservoir Characterization | $ | 12,224 | $ | 3,607 | $ | 12,463 | $ | 3,660 | |||||||
Drilling | 18,462 | 3,872 | 17,099 | 3,293 | |||||||||||
Production | 18,111 | 3,227 | 15,927 | 2,619 | |||||||||||
Eliminations & other | (217 | ) | (130 | ) | (223 | ) | (228 | ) | |||||||
Pretax operating income | 10,576 | 9,344 | |||||||||||||
Corporate & other | - | (848 | ) | - | (726 | ) | |||||||||
Interest income(1) | - | 31 | - | 22 | |||||||||||
Interest expense(1) | - | (347 | ) | - | (369 | ) | |||||||||
Charges & credits | - | (1,773 | ) | - | 420 | ||||||||||
$ | 48,580 | $ | 7,639 | $ | 45,266 | $ | 8,691 | ||||||||
Geographic Areas | |||||||||||||||
(Stated in millions) | |||||||||||||||
Twelve Months Ended | |||||||||||||||
Dec. 31, 2014 | Dec. 31, 2013 | ||||||||||||||
Revenue | Income Before Taxes | Revenue | Income Before Taxes | ||||||||||||
North America | $ | 16,151 | $ | 3,057 | $ | 13,897 | $ | 2,735 | |||||||
Latin America | 7,699 | 1,639 | 7,754 | 1,589 | |||||||||||
Europe/CIS/Africa | 12,515 | 2,765 | 12,411 | 2,593 | |||||||||||
Middle East & Asia | 11,875 | 3,273 | 10,767 | 2,697 | |||||||||||
Eliminations & other | 340 | (158 | ) | 437 | (270 | ) | |||||||||
Pretax operating income | 10,576 | 9,344 | |||||||||||||
Corporate & other | - | (848 | ) | - | (726 | ) | |||||||||
Interest income(1) | - | 31 | - | 22 | |||||||||||
Interest expense(1) | - | (347 | ) | - | (369 | ) | |||||||||
Charges & credits | - | (1,773 | ) | - | 420 | ||||||||||
$ | 48,580 | $ | 7,639 | $ | 45,266 | $ | 8,691 |
(1) Excludes interest included in the Product Groups and Geographic Areas results.
Supplemental Information
1) |
What was the pretax operating income margin and incremental operating margin for the full year 2014? |
|
The pretax operating income margin was 21.8% and the incremental operating margin was 37.2% for the full year 2014. | ||
2) |
What was the free cash flow as a percentage of income from continuing operations before noncontrolling interests, excluding charges and credits, for the full year 2014? |
|
Free cash flow as a percentage of income from continuing operations before noncontrolling interests, excluding charges and credits, was 84% for the full year 2014. | ||
3) |
What is the capex guidance for the full year 2015? |
|
Schlumberger capex (excluding multiclient and SPM investments) is expected to be $3.0 billion for 2015. Capex for the full year 2014 was $4.0 billion. | ||
4) |
What was included in “Interest and other income” for the fourth quarter of 2014? |
|
“Interest and other income” for the fourth quarter of 2014 was $71 million. This amount consisted of earnings of equity method investments of $58 million and interest income of $13 million. | ||
5) |
How did interest income and interest expense change during the fourth quarter of 2014? |
|
Interest income of $13 million was flat sequentially. Interest expense of $87 million was down $3 million sequentially. | ||
6) |
What is the difference between the “Pretax operating income” and Schlumberger’s consolidated income before taxes? |
|
The difference consists of such items as corporate items (including charges and credits) and interest income and interest expense not allocated to the segments, as well as interest on postretirement medical benefits, stock-based compensation expense and the amortization expense associated with certain intangible assets. | ||
7) |
What was the effective tax rate (ETR), excluding charges and credits, for the fourth quarter of 2014? |
|
The ETR for the fourth quarter of 2014, excluding charges and credits, was 21.4% as compared to 22.1% for the third quarter of 2014. | ||
The ETR for the fourth quarter of 2014, including charges and credits, was 55.6%. There were no charges or credits recorded during the third quarter of 2014. | ||
8) |
How many shares of common stock were outstanding as of December 31, 2014 and how did this change from the end of the previous quarter? |
|
There were 1.275 billion shares of common stock outstanding as of December 31, 2014. The following table shows the change in the number of shares outstanding from September 30, 2014 to December 31, 2014. |
(Stated in millions) | ||
Shares outstanding at September 30, 2014 | 1,287 | |
Shares sold to optionees, less shares exchanged | - | |
Vesting of restricted stock | - | |
Shares issued under employee stock purchase plan | - | |
Stock repurchase program | (12) | |
Shares outstanding at December 31, 2014 | 1,275 |
9) |
What were the weighted average number of shares outstanding during the fourth and third quarters of 2014 and how does this reconcile to the average number of shares outstanding, assuming dilution? |
|
The weighted average number of shares outstanding during the fourth quarter and third quarter of 2014 were 1.282 billion and 1.293 billion, respectively. The following is a reconciliation of the weighted average shares outstanding to the average number of shares outstanding, assuming dilution. |
(Stated in millions) | ||||
Fourth Quarter 2014 | Third Quarter 2014 | |||
Weighted average shares outstanding | 1,282 |
|
1,294 | |
Assumed exercise of stock options | 7 |
|
12 | |
Unvested restricted stock | 4 |
|
4 | |
Average shares outstanding, assuming dilution | 1,293 |
|
1,310 |
10) |
What were multiclient sales in the fourth quarter of 2014? |
|
Multiclient sales, including transfer fees, were $194 million in the fourth quarter of 2014 and $93 million in the third quarter of 2014. | ||
11) |
What do the various charges Schlumberger recorded during the fourth quarter of 2014 relate to? |
|
WesternGeco restructuring: |
||
Due to the expectation of lower exploration spending as a result of lower commodity prices, Schlumberger decided to restructure its WesternGeco marine seismic fleet in order to lower its operating costs. Three previous-generation acquisition vessels with lower towing capacity and higher operating costs will be converted to source vessels allowing for the termination of two third-party source vessel leases and the retirement of two owned source vessels. | ||
As a result of this restructuring, Schlumberger performed an impairment test and determined that the carrying values of certain of its vessels exceeded their respective fair values by $590 million. This impairment charge relates to the six Explorer class vessels which were acquired at a premium in the 2007 purchase of Eastern Echo Holdings Plc. In addition to the $590 million impairment charge relating to these six vessels, Schlumberger also recorded an $85 million impairment charge relating to a seismic intangible asset and $131 million of other charges primarily related to lease termination costs and other seismic assets as a result of the restructuring. Schlumberger did not incur any significant cash expenditures as a result of these charges. | ||
Venezuela currency devaluation loss: |
||
Although the functional currency of Schlumberger’s operations in Venezuela is the US dollar, a portion of the transactions are denominated in local currency. Schlumberger has historically applied the official exchange rate of 6.3 Venezuelan Bolivares fuertes per US dollar to remeasure local currency transactions and balances into US dollars. Effective December 31, 2014, Schlumberger concluded that it was appropriate to apply the SICAD II exchange rate of 50 Venezuelan Bolivares fuertes per US dollar as it believes that this rate best represents the economics of Schlumberger’s business activity in Venezuela. As a result, Schlumberger recorded a $472 million devaluation charge. | ||
Workforce reduction: |
||
In response to lower commodity pricing and anticipated lower exploration and production spending in 2015, Schlumberger decided to reduce its overall headcount to better align with anticipated activity levels for 2015. Schlumberger recorded a $296 million charge associated with a headcount reduction of approximately 9,000. | ||
SPM development project impairment: |
||
Schlumberger determined that, primarily as a result of the recent decline in commodity prices, the carrying value of its investment in an SPM development project in the Eagle Ford Shale was in excess of its fair value. Accordingly, Schlumberger recorded a $199 million impairment charge. | ||
About Schlumberger
Schlumberger is the world’s leading supplier of technology, integrated project management and information solutions to customers working in the oil and gas industry worldwide. Employing approximately 120,000 people representing over 140 nationalities and working in more than 85 countries, Schlumberger provides the industry’s widest range of products and services from exploration through production.
*Mark of Schlumberger or of Schlumberger companies.
Notes
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This full-year and fourth-quarter 2014 earnings release and Supplemental Information, as well as other statements we make, contain “forward-looking statements” within the meaning of the federal securities laws, which include any statements that are not historical facts, such as our forecasts or expectations regarding business outlook; growth for Schlumberger as a whole and for each of its segments (and for specified products or geographic areas within each segment); oil and natural gas demand and production growth; oil and natural gas prices; improvements in operating procedures and technology; capital expenditures by Schlumberger and the oil and gas industry; the business strategies of Schlumberger’s customers; the success of Schlumberger’s joint ventures and alliances; future global economic conditions; and future results of operations. These statements are subject to risks and uncertainties, including, but not limited to, global economic conditions; changes in exploration and production spending by Schlumberger’s customers and changes in the level of oil and natural gas exploration and development; general economic, political and business conditions in key regions of the world, including in
Source:
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713-375-3535